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Local Currencies would also lower exchange rate

Local Currencies would also lower Exchange Rate, says New Economics Party

Media Statement 23 April, 2012

If Government allowed local authorities to issue interest-free currencies, the New Zealand dollar would drop and jobs would be created, according to Deirdre Kent, a spokesperson for the New Economics Party.

She was responding to the Green Party’s call for the government to print money to lower the exchange rate. “While we applaud the Greens for addressing the elephant in the room, (our sovereign right to create our own money), doing it the way we suggest will also reduce unemployment and add to investment in green business. If centralised monopoly money is created, the experiences in US and Europe have been that the new money just stays in banks.”

“The New Economics Party would amend the Reserve Bank Act to allow for local authorities to issue currencies, designed with a circulation incentive, she said. Only then would there be new liquidity for business investment. The new money would move fast to counter the sluggish economy.”

“We are in a period of extreme risk of global financial contagion and New Zealand is a very import dependent country. So let’s think outside the box and stop being so hidebound by imposing a monopoly currency,” she said. “The way to thrive is to create our own currencies at local authority level. Then we will truly have import substitution as businesses work to find ways of replacing expensive imports with something they can manufacture themselves. The natural clothing industry would boom, as would the part of the home building and insulation industry that uses local materials. As soon as we get genuine import replacement the current account deficit falls and there is no longer such pressure to import capital. Then the dollar drops.”

The solutions to New Zealand’s economic problems are not by importing or printing more money, but by creating different currencies to circulate smoothly at a local level, she said. They could be monitored to avoid overprinting.